Selling Does NOT Create Value

When you sell something to someone, you haven’t created value or wealth. You’ve only transferred it.

When you sell a product to a customer you’re transferring wealth from them to you with the promise that a greater, similarly tangible value will be returned to them.

When you sell your equity to investors, IPO on the stock market or ICO with a new cryptocurrency ‘coin’ you’ve transferred wealth from others to yourself.

Selling Is Only A Promise, Just Like Debt Is A Promise

When you sell something to someone, you’ve entered a contract. Value creators know that the ‘close’ of a sale is really an opening. It’s the beginning of the value creation process and a promise that this process will be completed by a company or individual with the resources, systems, employees and capital to do so.

After the close… Real things need to be made and made use of. Real software needs to be developed and deployed. Real metal must be mined, made into toasters and iPhones and used to make toast and send texts.

The cycle is complete only when every promise has been fulfilled and when every debt has been repaid.

• Customers have products that work as described.

• Employees have been paid their salaries.

• Investors have a return on their investment.

• Business owners have a profit.

• Governments have a portion as tax revenue.

• External charities receive donations and gifts.

Everyone involved, every stakeholder and every uninvolved non-stakeholder, looks around, smiles, and says, “Let’s do that again.”

Everyone is a winner. This is what value creation and wealth creation look like.

If anyone has less at the end than at the beginning, then they are either…

• Knowingly acting as a philanthropist, giving without expecting anything in return, or…

• Unknowingly acting as a stooge, a naïve host providing for the parasites.

It is possible to sell, sell again, and then sell again, promising, promising more, and then promising more, but until you complete the cycle and fulfill the promise you are either the recipient of generous philanthropy or a thief of ignorant naïveté. You are not a value creator.

More selling, more promises and more debt may give you the resources you need to create value for all stakeholders. You may need to run a large crowdfunding campaign, promote an ICO or raise seed funding, then an A round, a B, a C, and then IPO all before creating value. Indeed, every fire needs a spark and every return-on-invested-capital requires that initial capital investment.

But, if you are less focused on creating a superior product for customers and more focused on creating a smooth sales pitch for your next investors, and less focused on quickly fulfilling promises with customers and more focused on making ever-larger unfulfilled promises to venture capitalists, ICO participants or backers, then it’s likely that rather than building a scalable value-generating business, you’re running a pseudo-scalable value-dissipating Ponzi Scheme.